Root Announces Successful Refinancing of Term Loan Facility with BlackRock
Root has successfully refinanced its term loan facility with BlackRock, reducing the principal amount from $300 million to $200 million. The new six-year term loan features improved terms, including an interest rate reduction of at least 300 basis points to 3-month term SOFR plus 600 basis points with performance-based step-downs. The company maintains $150 million of available capital under the amended facility. The refinancing is expected to reduce Root's interest expense by approximately 50% on a run-rate basis. The company will expense approximately $5.5 million of unamortized debt discount and issuance costs in Q4 related to the loan modification.
Root ha rifinanziato con successo la sua linea di credito a termine con BlackRock, riducendo l'importo principale da 300 milioni di dollari a 200 milioni di dollari. Il nuovo prestito a termine di sei anni presenta condizioni migliorate, inclusa una riduzione del tasso d'interesse di almeno 300 punti base, portandolo a SOFR a 3 mesi più 600 punti base, con decrementi legati alla performance. L'azienda mantiene 150 milioni di dollari di capitale disponibile sotto la struttura emendata. Si prevede che il rifinanziamento riduca le spese per interessi di Root di circa il 50% su base di run-rate. L'azienda registrerà circa 5,5 milioni di dollari di sconto sul debito non ammortizzato e costi di emissione nel quarto trimestre relativi alla modifica del prestito.
Root ha refinanciado con éxito su línea de crédito a término con BlackRock, reduciendo el monto principal de 300 millones de dólares a 200 millones de dólares. El nuevo préstamo a término de seis años presenta condiciones mejoradas, incluyendo una reducción de la tasa de interés de al menos 300 puntos básicos, llevándola a SOFR a 3 meses más 600 puntos básicos, con reducciones basadas en el rendimiento. La compañía mantiene 150 millones de dólares de capital disponible bajo la instalación enmendada. Se espera que el refinanciamiento reduzca los gastos por intereses de Root en aproximadamente un 50% con base en la tasa de ejecución. La compañía registrará aproximadamente 5,5 millones de dólares en descuentos no amortizados del deuda y costos de emisión en el cuarto trimestre relacionados con la modificación del préstamo.
Root는 BlackRock과의 기간 대출 시설을 성공적으로 재융자하여 원금 금액을 3억 달러에서 2억 달러로 줄였습니다. 새로운 6년 만기 대출은 이자율을 최소 300bp 인하하여 3개월 SOFR 플러스 600bp로 하며, 성과 기반 단계적 감소 조건이 포함되어 있습니다. 회사는 개정된 시설 아래에서 1억 5천만 달러의 가용 자본을 유지하고 있습니다. 이번 재융자는 Root의 이자 비용을 약 50% 감소시킬 것으로 예상됩니다. 회사는 대출 수정과 관련하여 4분기 동안 약 550만 달러의 미상환 부채 할인 및 발행 비용을 경비 처리할 예정입니다.
Root a réussi à refinancer sa facilité de prêt à terme avec BlackRock, réduisant le montant principal de 300 millions de dollars à 200 millions de dollars. Le nouveau prêt à terme de six ans propose des conditions améliorées, notamment une réduction du taux d'intérêt d'au moins 300 points de base, pour passer à SOFR à 3 mois plus 600 points de base, avec des réductions basées sur la performance. L'entreprise conserve 150 millions de dollars de capital disponible dans le cadre de la facilité amendée. Le refinancement devrait réduire les charges d'intérêt de Root d'environ 50 % sur une base de taux courant. L'entreprise va comptabiliser environ 5,5 millions de dollars de rabais de dette non amortis et de coûts d'émission au quatrième trimestre liés à la modification du prêt.
Root hat erfolgreich seine Terminkreditfazilität mit BlackRock refinanziert und den Hauptbetrag von 300 Millionen US-Dollar auf 200 Millionen US-Dollar reduziert. Der neue sechsjährige Terminkredit bietet verbesserte Bedingungen, einschließlich einer Zinssatzsenkung um mindestens 300 Basispunkte auf 3-Monats-SOFR zuzüglich 600 Basispunkte mit leistungsabhängigen Absenkungen. Das Unternehmen hält 150 Millionen US-Dollar an verfügbaren Mitteln unter der geänderten Fazilität. Die Refinanzierung wird voraussichtlich die Zinsaufwendungen von Root um etwa 50 % auf Basis des laufenden Satzes senken. Das Unternehmen wird im vierten Quartal etwa 5,5 Millionen US-Dollar an nicht amortisierten Schuldenrabatten und Emissionskosten im Zusammenhang mit der Kreditänderung verbuchen.
- Principal amount reduced by $100 million, improving debt profile
- Interest rate reduced by 300 basis points, lowering cost of capital
- Expected 50% reduction in interest expenses on run-rate basis
- Maintained $150 million of available capital for growth
- $5.5 million expense in Q4 for unamortized debt discount and issuance costs
Insights
The refinancing deal marks a significant positive development for Root's financial health. The
- Interest rate reduction of
300% basis points - Principal reduction of
$100 million - Projected
50% decrease in interest expenses
The enhanced terms reflect strengthening fundamentals and improved operational performance. Maintaining
Improved Terms Enhance Company's Financial Flexibility and Improve Cost of Capital
COLUMBUS, Ohio, Oct. 30, 2024 (GLOBE NEWSWIRE) -- Root, Inc. (NASDAQ: ROOT), the parent company of Root Insurance Company, today announced the successful refinancing of its term loan facility with funds and accounts managed by BlackRock Capital Investment Advisors, LLC and its affiliates (collectively, “BlackRock”). These improved terms in the long-standing relationship enhance Root’s financial flexibility and significantly improve its cost of capital.
The amended facility consists of a six-year term loan with a principal amount of
“We are excited to complete the refinancing of our term loan, which demonstrates the strength of our business model, our improved operational performance, and BlackRock’s continued confidence in our long-term growth outlook,” said Root Chief Financial Officer, Megan Binkley. “By reducing our principal balance and securing more favorable pricing terms, we've enhanced our capital structure while maintaining ample growth capital.”
At current interest rates, the amended loan will reduce Root’s interest expense by approximately
"This refinancing showcases BlackRock’s ability to provide comprehensive financing solutions to our borrowers wherever they are in their growth cycle,” said Corey Schwartz, Director at BlackRock. “The amended terms and lower cost of capital reflect Root’s strong performance and will enhance its ability to grow as it furthers its ongoing expansion."
In the fourth quarter, Root expensed approximately
About Root, Inc.
Founded in 2015 and based in Columbus, Ohio, Root, Inc. (NASDAQ: ROOT) is the parent company of Root Insurance Company. Root is revolutionizing insurance through data science and technology to provide consumers a personalized, easy, and fair experience. The Root app has more than 14 million app downloads and has collected nearly 29 billion miles of driving data to inform their insurance offerings.
For further information on Root, please visit root.com.
Contacts:
Media:
press@root.com
Investor Relations:
ir@root.com
Forward-looking statements
This press release contains forward-looking statements relating to, among other things, the future performance of Root and its consolidated subsidiaries that are based on Root’s current expectations, forecasts, and assumptions, and involve risks and uncertainties. These include, but are not limited to, statements regarding: expected interest rate impact on interest expense; our expected financial results for 2024; our ability to retain existing customers, acquire new customers, and expand our customer reach; our expectations regarding our future financial performance, including total revenue, gross profit/(loss), net income/(loss), direct contribution, adjusted EBITDA, net loss and loss adjustment expense, or LAE, ratio, net expense ratio, net combined ratio, gross loss ratio, gross LAE ratio, gross expense ratio, gross combined ratio, marketing costs and costs of customer acquisition, operating expenses, quota share levels, changes in unencumbered cash balances and expansion of our new and renewal premium base; our ability to realize profits, acquire customers, retain customers, contract with additional partners to utilize the products, or achieve other benefits from our embedded insurance offering; our ability to expand our distribution channels through additional partnership relationships, digital media, independent agents and referrals; our ability to drive a significant long-term competitive advantage through our partnership with Carvana and other partnerships; our ability to develop products for embedded insurance and other partners; the impact of supply chain disruptions, increasing inflation, a recession and/or disruptions to properly functioning financial and capital markets and interest rates on our business and financial condition; our ability to remain profitable and extend our capital runway; our goal to be licensed in all states in the United States and the timing of obtaining additional licenses and launching in new states; the accuracy and efficiency of our telematics and behavioral data, and our ability to gather and leverage additional data; our ability to materially improve retention rates and our ability to realize benefits from retaining customers; our ability to underwrite risks accurately and charge profitable rates; our ability to maintain our business model and improve our capital and marketing efficiency; our ability to drive improved conversion and decrease the cost of customer acquisition; our ability to maintain and enhance our brand and reputation; our ability to effectively manage the growth of our business; our ability to raise additional capital efficiently or at all; our ability to improve our product offerings, introduce new products and expand into additional insurance lines; our ability to cross sell our products and attain greater value from each customer; our lack of operating history and ability to remain profitable; our ability to compete effectively with existing competitors and new market entrants in our industry; future performance of the markets in which we operate; our ability to operate a “capital-efficient” business and obtain and maintain desirable levels of reinsurance; the effect of further reductions in the utilization of reinsurance, which would result in retention of more premium and losses and could cause our capital requirements to increase; our ability to realize economies of scale; our ability to attract, motivate and retain key personnel, or hire personnel, and to offer competitive compensation and benefits; our ability to deliver a vertically integrated customer experience; our ability to develop products that utilize telematics to drive better customer satisfaction and retention; our ability to protect our intellectual property and any costs associated therewith; our ability to develop an autonomous claims experience; our ability to take rate action early and react to changing environments; our ability to meet risk-based capital requirements; our ability to realize the benefits anticipated from our Texas county mutual fronting arrangement; our ability to expand domestically; our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business; the impact of litigation or other losses; changes in laws or regulations, or changes in the interpretation of laws or regulations by a regulatory authority; our ability to defend against cybersecurity threats and prevent or recover from a security breach or other significant disruption of our technology systems or those of our partners and third-party service providers; the effect of interest rates on our available cash and our ability to maintain compliance with our term loan, including performance and liquidity covenants; our ability to maintain proper and effective internal control over financial reporting; our ability to continue to meet The Nasdaq Stock Market listing standards; and the growth rates of the markets in which we compete.
Root’s actual results could differ materially from those predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Factors that could cause or contribute to such differences also include, but are not limited to, those factors that could affect Root’s business, operating results, and stock price included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Root’s 2023 Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, and other filings with the SEC at http://ir.joinroot.com or the SEC’s website at www.sec.gov.
Undue reliance should not be placed on the forward-looking statements, which are based on information available to Root on the date hereof. We assume no obligation to update such statements.
FAQ
What are the new terms of ROOT's refinanced term loan with BlackRock?
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